U. S. SECURITIES AND EXCHANGE COMMISSION


WASHINGTON, D.C. 20549





FORM 10-Q A/1








[X]

QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the quarterly period ended June 30, 2010[  ]

TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934





For the transition period from ___________ to _____________





AVT, INC.





Nevada

000-53372

11-3828743(State or other jurisdiction

(Commission File Number)

(IRS Employerof Incorporation)



Identification Number)341 Bonnie Circle, Suite 102Corona, CA 92880(Address of principal executive offices)(951) 737-1057(Issuer’s Telephone Number)





Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act of 1934 during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes [ X].





Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule12b-2 of the Exchange Act.





Large accelerated filer  [   ]

Accelerated filer    [    ]Non-accelerated filer    [   ] (Do not check if smaller reporting company)

Smaller reporting company    [X]





Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). No [ X ]







APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY


PROCEEDINGS DURING THE PRECEDING FIVE YEARS





Check whether the registrant filed all documents and reports required to be filed by Section 12, 13, or 15(d) of the Exchange Act of 1934 after the distribution of securities under a plan confirmed by a court. Yes ___ No ____





APPLICABLE ONLY TO CORPORATE ISSUERS





State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date:  As of June 30, 2010, there were 33,664,883 shares of our common stock were issued and outstanding.














PART I





ITEM 1.FINANCIAL STATEMENTS




AVT, INC.PageBalance Sheets
F-2Statements of Income
F-3Statements of Changes in Stockholders' Equity
F-4Statements of Cash Flows
F-5Notes to Financial Statements
F-6F-1
  
  AVT, INC.BALANCE SHEETSJune 30, 2010

December 31, 2009ASSETSCurrent Assets:Cash


$
259,712
$
1,078,252Accounts receivable, net



220,435

176,549Finance receivable, net



2,590,784

1,705,986Inventory



960,684

395,461Other current assets





0Total current assets



4,031,615

3,356,248Property and equipmentVending equipment and systems



2,183,481

2,073,457Vehicles



493,450

454,191Machinery and equipment



506,800

500,000Office equipment and furniture



546,269

487,595Building and leasehold improvements


232,345

194,051Less: accumulated depreciation



(1,190,541)

(1,074,604)Property and equipment, net



2,771,804

2,634,690Intangible assets, net



11,586,327

11,346,523Goodwill



1,262,526

1,262,526Total assets


$
19,652,272
$
18,599,987LIABILITIES AND STOCKHOLDERS' EQUITYCurrent liabilities:Accounts payable



46,560

114,402Other current liabilities



720,148

330,653Total current liabilities


$
766,708
$
445,055Long-term liabilities:Long-term debt



230,533

251,464Notes payable



980,846

1,476,996Total long-term liabilities



1,211,379

1,728,460Total Liabilities



1,978,087

2,173,515Stockholders' equityPreferred stock



2,033

2,200Common stock, 100,000,000 shares authorized, $.001 par value,$33,664,883 shares issued and outstanding


24,568

23,190Additional paid in capital



24,140,940

22,940,553Accumulated deficit



(6,493,356)

(6,539,471)Total stockholders' equity



17,674,185

16,426,472Total liabilities and stockholders' equity

$
19,652,272
$
18,599,987F-2(See Notes to Financial Statements)
  
  AVT, INC.STATEMENT OF INCOME3 months ended
6 months ended
3 months ended
6 months endedJune 30, 2010

June 30, 2010

June 30, 2009

June 30, 2009Revenues:Vending machine products and participation
$
279,750
$
533,227
$
299,026
$
561,013Vending machine manufacturing and fabrication
922,996

1,848,278

355,248

557,908Non-vending


186,051

364,549

215,174

427,986Total revenues


1,388,797

2,746,054

869,448

1,546,907Operating costs and expenses:Cost of vending machine products

133,016

253,324

183,170

306,472Cost of vending manufacturing

248,099

616,669

135,459

152,607Cost of non-vending revenues

76,499

129,037

30,434

98,962General and administrative

787,773

1,471,223

464,897

926,452Depreciation Expense


57,192

57,192

0

368,500Total operating costs and expenses
1,302,579

2,527,445

813,960

1,852,993Income from operations


86,218

218,609

55,488

(306,086)Other income (expense)Interest expense


61,548

138,727

1,635

1,635Provision for Income Taxes

0

33,768

0

0Total other income (expense)Net Income

$
24,670
$
46,114
$
53,853
$
(307,721)Net income per share - basic
$
0.02
$
0.02
$
0.01
$
0.01Net income per share - diluted
$
0.02
$
0.02
$
0.01
$
0.01Average shares outstanding

33,664,883

33,664,883

22,846,170

22,846,170Weighted average shares outstanding

49,324,456

49,324,456

37,701,995

37,701,995F-3(See Notes to Financial Statements)
  
  AVT, INC.STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITYTotalPreferred Stock

Common Stock

Additional
Accumulated
Stockholders'Shares

Amount
Shares

Amount
Paid In Capital
Deficit

EquityBalance at December  31, 2007
*
1,200,000

1,200

13,441,310

18,416

18,016,080

(6,692,267)

11,343,429Issuance of common stock





7,083,163

1,421

2,430,834



2,432,255Issuance of preferred stock

1,000,000

1,000









1,000Issuance of common stock for conversion of preferred
(166,667)





167





167Issuance of common stock for conversion of notes payable

625,147

625





625for 1 thru 4Net Income (Loss) for the year ended December 31,2008


—

—



35,728

35,728Balance at December  31, 2008

2,033,333

2,200

21,149,620

20,629

20,446,914

(6,656,539)

13,813,204Issuance of common stock





5,255,456

1,597

2,493,639



2,495,236Issuance of common stock for conversion of notes payable

949,185

964





964Net Income (Loss) for the year ended December 31,2008








117,068

117,068Balance at December  31, 2009

2,033,333

2,200

27,354,261

23,190

22,940,553

(6,539,471)

16,426,472Issuance of common stock





3,126,747

386

426,358



426,744Issuance of common stock for conversion of notes payable

50,708

50





50Net Income (Loss) for the quarter ended March 31,2010









21,445

21,445Balance at March 31, 2010

2,033,333

2,200

30,531,716

23,626

23,366,911

(6,518,026)

16,874,711Issuance of common stock





2,246,732

217

774,029



774,246Issuance of common stock for conversion of notes payable
-167

886,435

725





558Net Income (Loss) for the quarter ended June 30,2010









24,669

24,669Balance at June 30, 2010

2,033,333

2,033

33,664,883

24,568

24,140,940

(6,493,357)

17,674,184F-4
  
  AVT, INC.STATEMENTS OF CASH FLOWSJune 30, 2010

June 30, 2009Cash flows from operating activities:Net income


$
46,114
$
(307,722)Adjustments to reconcile net income tonet cash provided by operating activities:Depreciation/ Amortization



115,937

26,883Changes in operating assets and liabilities:Accounts receivable



(928,683)

(286,101)Inventory



(565,224)

10,442Accounts payable and accrued expenses



321,653

41,171Net cash provided by (used in) operating activities

(1,010,203)

(515,327)Cash flows from investing activitiesPurchases of property and equipment



(253,051)

(411,664)Other Assets



0

(207,265)Intangible Assets



(239,804)

(195,163)Net cash provided by (used in) investing activities

(492,855)

(814,092)Cash flows from financing activitiesProceeds from (payments on) notes payable, net


(496,150)

879,495Equipment Leases



(19,552)

104,990Proceeds from the issuance of common stock


1,200,220

364,439Net cash provided by (used in) financing activities

684,518

1,348,924Net increase (decrease) in cash



(818,540)

19,505Cash, beginning of year



1,078,252

56,547Cash, end of year


$
259,712
$
76,052Supplimental disclosure of cash flow information:Cash paid during the period for:Interest


$
61,548
$
1,635Income taxes


$

$F-5(See Notes to Financial Statements)









AVT, INC.
 NOTES TO FINANCIAL STATEMENTS
 (6/30/10)
 
 1.  ORGANIZATION AND NATURE OF OPERATIONS
 
 The Company was originally organized under the laws of the State of Delaware on February 26, 1969, as Infodex, Inc. At that time, the Company was engaged in the development, manufacturing and selling of various electronic devices, especially in the preparation various types of oscilloscopes known as “CRT” display modules.  In March 2005, the Company was renamed to Midwest Venture Group, Inc. and In September 2005, the Company again changed its name to Automated Vending Technologies, Inc. to better reflect the Company’s primary operations as a vending machine manufacturer and vending route operator.  In January, 2008, the Company changed its state of domicile to Nevada, changed its name to AVT, Inc. and completed a 1 for 3 reverse split of its common stock.  In April 2008, the Company acquired 100% of the outstanding common stock of AC Mexican Food, Inc. dba Jalapeno’s Mexican food restaurant and as further described in Note 6.
 
 2.           SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
 The Company’s policy is to use the accrual method of accounting to prepare and present financial statements, which conform to generally accepted accounting principles in the United States (GAAP). The company has a December 31st year end.
 
 Use of Estimates in Financial Statement Preparation
  The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. The Company's financial statements include amounts that are based on management's best estimates and judgments. Actual results could differ from those estimates.
 
 Cash and Cash Equivalents
 
 The Company considers all highly liquid investments with maturities of three months or less when purchased, to be cash equivalents.
 
 Concentration of Credit Risk
 
 The Organization places its cash deposit with high-credit quality, Federal Deposit Insurance Corporation (FDIC) insured financial institutions. Financial instruments that potentially subject the Organization to concentrations of credit risk consist primarily of cash deposits in excess of FDIC’s insurance limit of $250,000.    Management believes the financials risk associated the cash deposits in excess of this limit is minimal and has not experienced any losses to date.
 
 Accounts Receivable
 
 The Company is also subject to credit risk as it extends credit to its customers, mostly on an unsecured basis after performing certain credit analysis.  The Company’s terms are typically net 30 days.  The Company periodically reviews the creditworthiness of its customers and provides for probable uncollectible amounts through a charge to earnings and a credit to an allowance for doubtful accounts based on its assessment of the current status of individual accounts.  As of December 31, 2008, the Company considered all outstanding receivables fully collectible, therefore an allowance of $-0- has been provided for.
  Inventory
 
 Inventory is primarily valued using an average cost method and is stated at the lower of cost or market.
 
 Property and Equipment
 
 Property and equipment are stated at cost.  Depreciation and amortization are provided using the straight-line method over the estimated useful lives or the term of the lease of the related assets, whichever is shorter. Estimated useful lives generally range from 3 to 7 years.
 
 Maintenance and repairs are charged to expense as incurred.  Renewals and improvements of a major nature are capitalized. At the time of the retirement or other disposition of property and equipment, the cost and accumulated depreciation and amortization are removed from the accounts and any resulting gains or losses are reflected in income.
 
 Intangible Assets
 
 Intangible assets are carried at cost and consist of patents, copyrights and certain vending route contracts. Amortization is provided on the straight-line basis over the estimated useful lives of the respective assets, ranging from five to seventeen years.
 
 Goodwill
 
 Goodwill is the excess of cost over the fair value of net assets of businesses acquired.  Goodwill is not amortized but is evaluated for impairment as described below.
 
 Impairment of Long-Lived Assets
 
 The Company accounts for its long-lived assets in accordance with ASC 360, "Property, Plant, and Equipment." ASC 360 requires that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that the historical cost carrying value of an asset may no longer be appropriate. The Company assesses recoverability of the carrying value of an asset by estimating the future net cash flows expected to result from the asset, including eventual disposition. If the future net cash flows are less than the carrying value of the asset, an impairment loss is recorded equal to the difference between the asset's carrying value and fair value or disposable value. The factors considered by management in performing this assessment include current operating results, trends, and prospects, as well as the effects of obsolescence, demand, competition, and other economic factors.  For the quarters ended June 30, 2010 and 2009, the Company did not deem any of its long-lived assets to be impaired and thus no impairment losses were recorded.
 
 Revenue Recognition
 
 Revenue is recognized when evidence of an arrangement exists; products are received by customers and title passes; fee is fixed and determinable; and, collectibility is reasonably assured.
 
 Income Taxes
 
 Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.
 The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.  The components of the deferred tax assets and liabilities are classified as current and non-current based on their characteristics.  A valuation allowance is provided for certain deferred tax assets if it is more likely than not that the Company will not realize tax assets through future operations.
 
 Segment Reporting
 
 Pursuant to Statement of Financial Accounting Standards No. 131, Disclosures about Segments of an Enterprise and Related Information, (SFAS 131), the Company is required to disclose certain disclosures of operating segments, as defined in SFAS 131. Management has determined that the Company has two (2) segments related to its Vending and Restaurant operations.
 
 Earnings Per Share
 
 Basic earnings per share is computed in accordance with FASB 128 by dividing income available to common shareholders (the numerator) by the weighted-average number of common shares (the denominator) for the period. The computation of diluted earnings per share is similar to basic earnings per share, except that the denominator is increased to include the number of additional common shares that would have been outstanding if potentially dilutive common shares had been issued.
 
 Basic earnings per share take into account only the actual number of outstanding common shares during the period.  Diluted earnings per share take into effect the common shares actually outstanding and the impact of convertible securities, stock options, stock warrants and their equivalents.
 
 Recent Accounting Pronouncements
 
 In December 2007, the FASB issued SFAS No. 141(R), Business Combinations(SFAS 141(R)), which replaces SFAS No. 141, Business Combinations, requires an acquirer to recognize the assets acquired, the liabilities assumed, and any non-controlling interest in the acquiree at the acquisition date, measured at their fair values as of that date, with limited exceptions. This Statement also requires the acquirer in a business combination achieved in stages to recognize the identifiable assets and liabilities, as well as the non-controlling interest in the acquiree, at the full amounts of their fair values.
 
 SFAS 141(R) makes various other amendments to authoritative literature intended to provide additional guidance or to confirm the guidance in that literature to that provided in this Statement. This Statement applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. The Company does not expect the adoption of SFAS 141 (R) to have a material impact on our financial statements.
 
 In December 2007, FASB issued SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements(SFAS 160), which amends Accounting Research Bulletin No. 51, Consolidated Financial Statements, to improve the relevance, comparability, and transparency of the financial information that a reporting entity provides in its consolidated financial statements. SFAS 160 establishes accounting and reporting standards that require the ownership interests in subsidiaries not held by the parent to be clearly identified, labeled and presented in the consolidated statement of financial position within equity, but separate from the parent’s equity. This statement also requires the amount of consolidated net income attributable to the parent and to the non-controlling interest to be clearly identified and presented on the face of the consolidated statement of income. Changes in a parent’s ownership interest while the parent retains its controlling financial interest must be accounted for consistently, and when a subsidiary is deconsolidated, any retained non-controlling equity investment in the former subsidiary must be initially measured at fair value. The gain or loss on the deconsolidation of the subsidiary is measured using the fair value of any non-controlling equity investment. The Statement also requires entities to provide sufficient disclosures that clearly identify and distinguish between the interests of the parent and the interests of the non-controlling owners.
 This Statement applies prospectively to all entities that prepare consolidated financial statements and applies prospectively for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008. The Company does not expect this to have a significant impact on its financial statements.
 
 3.           INVENTORY
  June 30, 2010
December 31, 2009Food products
$ 54,522
$  58,769Machine inventory
$408,441
$215,282Parts inventory
$481,658
$105,347Machine change
$  16,063
$ 16,063$960,084
$395,461
 
 Inventories consists of food products at $54,522, machine inventory at $408,441, parts inventory at $481,658 and machine change at $16,063 as of June 30, 2010.Inventories consists of food products at $58,769, machine inventory at $215,282 parts inventory at $105,347 and machine change at $16,063 as of December 31, 2009.
 
 4.           PROPERTY AND EQUIPMENT
 
 
 Machines on location
$1,051,638Restaurant equipment
$   506,800Building improvements
$   232,345Vehicles
$   493,449Furniture and equipment
$   372,277Fabrication and design
$1,023,477Kiosk
$   108,366Computer and software
$   173,992$3,962,344
 
 Fixed assets include machines on location $1,051,638, restaurant equipment $506,800, building improvements $232,345,  vehicles $493,449  furniture and equipment $372,277, fabrication and design $1,023,477, Kiosk $108,366, computer and software $173,992 as of June 30, 2010.
 
 5.           INTANGIBLE ASSETS
 
 
 Application Software & Systems Architecture
11,586,327$11,586,327
 
 Our intangible assets include the development of system design, proprietary technologies, application software, and customize systems in order to maintain the high degree of market position.  AVT developed proprietary software, requires a methodical approach to the design and continuous evolution, enhancement and system architecture.  Our application software programs, protocols, patents, and intellectual property that pertains to the design and system architecture that are all or in part of AVT’s group of key intangible assets.  We acquired the rights to our pending Wireless Management of Remote Vending patent via payment of 3,000,000 restricted shares of the Company’s common stock valued at $1.00 per share and the rights to our pending MultiMedia System, Method for Controlling Vending Machines patent via payment of 1,000,000 restricted shares of the Company’s common stock valued at $1.00 per share.
 
 6.           BUSINESS COMBINATION
 
 In April 2008, we purchased 100% of the assets and liabilities of AC Mexican Food, Inc. dba Jalapenos Mexican Food, for a purchase price of 1,000,000 restricted shares of our Series A Convertible Preferred stock.  The asset was valued at $1,000,000 pursuant to the value of fixtures in the restaurant.  The Series A Convertible Preferred stock was arbitrarily valued at $1.00 per share as there is no public market for the Company’s Preferred stock. Pursuant to FASB 141, the primary purpose of the purchase was to provide an alternative stream for the Company and to provide the Company with the ability to provide Mexican fresh foods in the Company’s vending machines.
 
 7.           LIABILITIES
 
 Other Current Liabilities
 
 Our other current liabilities consist of payroll liabilities of $33,485, current shareholder notes of $251,622, loans payable to Worth, Inc. in the amount of $445,647, sales tax payable of $-12,293 and automobile leases totaling $1,686.
 
 Long Term Liabilities
 
 Lease Account
2010
2011
2012
2013
2014Falcon 241414
$  33,518.53
$  24,443.30
$   7,698.98
$     -
$     -Falcon 21430
$  33,518.53
$  25,838.66
$   9,094.34
$     -
$     -Falcon 598
$  31,307.77
$  19,550.55
$         -
$     -
$     -De Lage 77509
$  25,629.67
$  18,814.08
$   3,498.24
$     -
$     -Firestone Financial
$  26,923.81
$  15,931.77
$        -
$     -
$     -Firestone 528916
$  45,219.53
$  31,462.24
$   5,902.24
$     -
$     -America Leasing
$  34,415.28
$  26,533.61
$  10,233.16
$
$$ 230,533.12
$ 162,574.21
$  36,426.96
$     -
$     -
 
 Long term liabilities include investor notes in the amount of $980,846.  We have long term equipment leases totaling $230,533.
 
 The company's convertible promissory notes are offered with 1 to 36 month maturity dates at 10% paid quarterly in cash or stock and offer conversion features to convert the outstanding principal and interest into shares of our common stock.
  8.           FAIR VALUE OF FINANCIAL INSTRUMENTS
 
 Fair Value Measurements
 
 On January 1, 2008, the Company adopted SFAS No. 157 (SFAS 157), Fair Value Measurements. SFAS 157 relates to financial assets and financial liabilities. In February 2008, the FASB issued FASB Staff Position (FSP) No. FAS 157-2, Effective Date of FASB Statement No. 157,which delayed the effective date of SFAS 157 for all nonfinancial assets and nonfinancial liabilities, except those that are recognized or disclosed at fair value in the financial statements on at least an annual basis, until January 1, 2009 for calendar year-end entities.
 
 SFAS 157 defines fair value, establishes a framework for measuring fair value in accounting principles generally accepted in the United States of America (GAAP), and expands disclosures about fair value measurements. The provisions of this standard apply to other accounting pronouncements that require or permit fair value measurements and are to be applied prospectively with limited exceptions.
 
 SFAS 157 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. This standard is now the single source in GAAP for the definition of fair value, except for the fair value of leased property as defined in SFAS 13. SFAS 157 establishes a fair value hierarchy that distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity’s own assumptions, about market participant assumptions, that are developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy under SFAS 157 are described below:
 
 • Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.
 
 • Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates); and inputs that are derived principally from or corroborated by observable market data by correlation or other means.
 
 • Level 3 - Inputs that are both significant to the fair value measurement and unobservable. These inputs rely on management's own assumptions about the assumptions that market participants would use in pricing the asset or liability. (The unobservable inputs are developed based on the best information available in the circumstances and may include the Company's own data.)
 
 Fair Value Option
 
 On January 1, 2008, the Company adopted SFAS No. 159 (SFAS 159), The Fair Value Option for Financial Assets and Financial Liabilities. SFAS 159 provides a fair value option election that allows entities to irrevocably elect fair value as the initial and subsequent measurement attribute for certain financial assets and liabilities. Changes in fair value are recognized in earnings as they occur for those assets and liabilities for which the election is made. The election is made on an instrument by instrument basis at initial recognition of an asset or liability or upon an event that gives rise to a new basis of accounting for that instrument. The adoption of SFAS 159 did not have a material impact on the Company’s financial statements as the Company did not elect the fair value option for any of its financial assets or liabilities.
 
 9.           COMMITMENTS AND CONTINGENCIES
 
 Indemnities and Guarantees
 
 During the normal course of business, the Company may make certain indemnities and guarantees under which it may be required to make payments in relation to certain transactions. These indemnities may include certain agreements with the Company’s officers, under which the Company may be required to indemnify such person for liabilities arising out of their employment relationship, agreements with financial institutions in connections with certain of the Company’s notes payable, and agreements with leasing of office space for certain actions arising during the Company tenancy.  The duration of these indemnities and guarantees do not provide for any limitation of the maximum potential future payments the Company could be obligated to make.
 
 Historically, the Company has not been obligated to make payments for these obligations and no liabilities have been recorded for these indemnities and guarantees in the accompanying balance sheet.
 
 Leases
 
 The Company has various operating lease commitments in connection with its office space and certain equipment.
 
 Legal
 
 The Company may be involved from time to time in claims, lawsuits, and disputes with third parties, actions involving allegations or discrimination or breach of contract actions incidental in the normal operations of the business. The Company is currently not involved in any such litigation or disputes which management believes could have a material adverse effect on its financial position or results of operations.
 
 11.           STOCKHOLDERS’ EQUITY
 
 The Company has the following classes of capital stock as of June 30, 2010.
 
 Common stock, $.001 par value:  100,000,000 shares authorized: 33,664,883 shares issued and outstanding.
 
 Preferred Stock, $.001 par value: 3,000,000 shares authorized as Series A Convertible Preferred.  2,033,333 shares of Series A Convertible Preferred stock issued and outstanding.
 
 Common Stock
 
 On or about January, 2008, a majority of the Company’s shareholders approved the resolution of the Company’s board of directors to amend the Company’s articles of incorporation to reverse split the Company’s common stock on a 1 for 3 basis.  All fractional shares were rounded up.  Shares issued prior to January, 2008, have been retroactively restated to reflect the impact of the stock split.
 
 As at December 31, 2008, the Company had 21,149,620 shares of its common stock issued and outstanding.
 
 As at December 31, 2009, the Company had 27,354,261 shares of its common stock issued and outstanding.
 
 As at March 31, 2010, the Company had 30,531,716 shares of its common stock issued and outstanding.
 
 As at June 30, 2010, the Company had 33,664,883 shares of its common stock issued and outstanding.
 
 Preferred Stock
 
 For the year ended December 31, 2007, we issued 1,200,000 shares of our Series C Convertible Preferred Stock in exchange for cancellation of debt and our obligation to issue shares of our common stock.  The Series C Convertible Stock was valued at $.001 par value.
 
 For the quarter ended March 31, 2008, the Company’s Board of Directors cancelled all issued and outstanding shares of its Series C Convertible Preferred stock and designated 3,000,000 preferred shares as Series A Convertible Preferred Stock, $.001 par value, of which 2,033,333 shares are issued and outstanding as at March 31, 2009.
 
 For the quarter ended June 30, 2008, 166,667 shares of our issued and outstanding Series A Convertible Preferred stock were converted into 1,000,000 shares of our common stock.
 
 For the quarter ended June 30, 2008, we issued SWI Trading, Inc. a total of 1,000,000 shares of our Series A Convertible Preferred stock as payment for the purchase of certain assets and liabilities of AC Mexican Food, Inc., a California corporation.  The Series A Convertible Stock was valued at $.001 par value.
 
 There are no previsions or circumstances that will require the company to record our Preferred Stock outside permanent equity.
 
 The Series A Convertible Preferred Stock has the following rights and preferences:
 
 Conversion Rights
 
 Each share of the Series A Preferred Stock may be convertible, at the option of the holder thereof and subject to notice requirements described herein, at any time, into six (6) shares of our common stock.
 
 Dividend Rights
 
 Holders of our Series A Convertible Preferred Stock will be entitled to receive dividends on the stock out of assets legally available for distribution when, as and if authorized and declared by our Board of Directors.
 
 Liquidation Preference
 
 The holders of Series A Convertible Preferred Stock are entitled to receive, prior to the holders of the other series of the Company’s Preferred Stock and prior and in preference to any distribution of our assets or surplus funds to the holders of any other shares of stock of the Company by reason of their ownership of such stock, an amount equal to $0.37 per share with respect to each share of Series A Convertible Preferred Stock, plus all declared but unpaid dividends with respect to such share.
 
 Voting Rights
 
 Except as otherwise required by law, the holders of the Company’s Series A Convertible Preferred Stock vote; (i) as a single class and shall have such number of votes as is determined by multiplying (a) the number of shares of Series A Convertible Preferred Stock held by such holder, (b) the number of issued and outstanding shares of our Series A Convertible Preferred Stock and Common Stock as of the record date for the vote, or, if no such record date is established, as of the date such vote is taken or any written consent of stockholders is solicited, and (c) 0.00000025; and (ii) the holders of our Common Stock shall have one vote per share of Common Stock held as of such date.


ITEM 2.                      MANAGEMENT’S DISCUSSION, ANALYSIS OF FINANCIAL CONDITION ANDPLAN OF OPERATIONS





The following discussion and analysis should be read in conjunction with our audited consolidated financial statements and related notes included in this registration statement.  This registration statement contains “forward-looking statements.” The statements contained in this report that are not historic in nature, particularly those that utilize terminology such as “may,” “will,” “should,” “expects,” “anticipates,” “estimates,” “believes,” or “plans” or comparable terminology are forward-looking statements based on current expectations and assumptions.





Various risks and uncertainties could cause actual results to differ materially from those expressed in forward-looking statements.  Factors that could cause actual results to differ from expectations include, but are not limited to, those set forth under the section “Risk Factors” set forth in this registration statement.





The forward-looking events discussed in this registration statement, the documents to which we refer you and other statements made from time to time by us or our representatives, may not occur, and actual events and results may differ materially and are subject to risks, uncertainties and assumptions about us.  For these statements, we claim the protection of the “bespeaks caution” doctrine.  All forward-looking statements in this document are based on information currently available to us as of the date of this report, and we assume no obligation to update any forward-looking statements.  Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results to differ materially from any future results, performance or achievements expressed or implied by such forward-looking statements.




Intangible asset valuation is a methodical and detailed process that requires the complete understanding of our business, our core competencies and the intangible asset's impact upon our business. We analyze the future income stream associated with the specific asset, the market price of comparable assets, and the current cost to re-create or duplicate an asset.




THE COMPANY





AVT, Inc. is a public company.  Our common stock is quoted on the Pink Sheets in the over-the-counter market.





Our primary focus is on the design and manufacture of technology based vending and product dispensing systems which utilize an inventive approach on development, integration of technology, remote management and advertising media.  AVT’s designs are innovative in that our systems exploit the use of integrated PCs, having internet connectivity among a variety of other components that work in concert with the PC such as, printers, credit card readers, wireless devices, RF modules and just about any peripheral that is capable of connecting to a PC.  As a design manufacture, creator of specialty application software and integrator of technology, our products define the cutting edge of the vending and dispensing industry and position us as a leader and industry innovator.





We are also a vending operator having approximately 1,000 vending systems throughout the Los Angeles, Orange and Riverside, California Counties.  It is our vending operation experience over the past years that add to the distinctive advantage and overall success as a manufacture and leader of technology based vending solutions. Ourexecutive offices, engineering and manufacturing facility and warehouse are located at 341 Bonnie Circle, Suite 102, Corona, CA 92880.  Our telephone number is (951) 737-1057.





We also own and operate a Mexican fast food restaurant, known as AC Mexican Food, Inc. dba, Jalapenos.  The restaurant is located in a food court of a retail mall at 20532 El Toro Road, #112, Mission Viejo, CA 92692.  The restaurant is a typical Mexican fast food restaurant that operates from mid morning through late evening with the majority of its business being lunch and dinner patrons.





We were originally incorporated under the laws of the State of Delaware on February 25, 1969 as Infodex, Incorporated.  In October, 2005, we acquired Automated Vending Technologies, Inc., a Nevada corporation and began focusing our business on vending operations. In December, 2006 we merged our operating wholly owned subsidiary into the parent company and in January of 2008, we changed our state of domicile to the State of Nevada and renamed the company to “AVT, Inc.”  We operate in the State of California as “AVT Vending, Inc.”





THE BUSINESS





AVT, Inc.is an innovative developer, manufacturer and vending operator of technology based vending and product dispensing solutions and equipment that utilize specifically developed patent pending application software developed at and by AVT's software team.  We currently employ a workforce of approximately 40 people and services approximately 300 commercial and government vending accounts in Southern California.  We design our systems to utilize our patent pending technologies and AVT developed application software to drive our vending innovations which are in various stages of development and deployment.  AVT’s technology staff ranges from electrical and mechanical engineers to software developers, programmers and IT specialists thereby enabling us to design and control all aspects of our unique products while keeping the “edge” on all of our developed products.





Our business currently focuses on the following:





·
Design, development and manufacturing of the RAM 4000 vending machine, a refrigerated beverage/snack combination vending machine containing more sophisticated technology then our competitors and offered at competitive pricing.





·
Design, development and manufacturing of the RAM 5000 vending machine, a high capacity non-refrigerated snack/chip/pastry combination vending machine containing more sophisticated technology then our competitors and offered at competitive pricing.





·
Design, development and manufacturing an attractive, built-in, secure access vending cabinet for hotels that do not have on-site food service. Our AEMTM cabinet incorporates patent pending touch-screen to vend or TSVTM which replaces both stand-alone machines and in-room locked mini-fridges while providing controlled access and a range of direct customer billing options.





·
AVT has developed a variety of customized ‘high end” PC based product dispensing systems designed to meet the needs of customers looking to dispense specific products or branded products.  Most of these customized products utilize application software developed by AVT’s software team to give the unique intuitive operation expected by the customer.





·
Many of our custom dispensing systems are derivatives of the AVT RAM 4000 or 5000 base housing having touch screens, front panels and vinyl wrapped housings which are unique or customized to end customer’s needs for dispensing “branded” products.  For additional attention or attraction, many of the system include large color digital signage.  These systems allow a variety of AVT designed technologies to be integrated into the system to meet specific customer needs for a custom dispensing system.  Our current high end product dispensing includes the Ivend, 24Hr. Vend Mart, and Tech-Store.





·
We developed Patent-Pending, affordable software called VMSTM (Vending Management System).VMSTM is application software that enables AVT designed and manufactured vending and product dispensing systems to be  remotely managed by the vending owners/operators allowing them to receive real time information via the Internet.  Our VMSTM software also  allows for the reporting of cashless payments when the system is equipped with credit card accepting hardware.  Together (VMSTM software and Credit Card reader) enabling patrons to use credit card or membership card for completing vending transactions.





·
We have developed and maintain an application software product for digital signage called AVTI MediaTM.  This application program is in effect a PC media player which is capable of playing all varieties of advertisements specifically designed to be played on PCs which are an integrated into and a part of our dispensing systems offered for sale.  Software designed a ads which are played by the integrated PC. The advertisements displayed on highly visible, LCD displays for viewing by the general public.  The LCD video panels which are also integrated into our vending systems create a new opportunity for advertisers to reach consumers in a captive setting while generating additional revenue from the sale of software based advertisements.





·
TSV (Touch Screen Vending) is our primary flagship application software product.  Designed and development by AVT’s software staff several years ago, it is like most of today’s application software, constantly maintained and in continuous refinement, support and development to remain compatible with and competitive with the ever changing PCs environment.  Our TSV software product is the primary foundation for ALL of AVT’s touch screen based systems like the RAM 4000 and RAM 5000 to name a few.  This application software is modular by design allowing extreme flexibly by our customers allowing them to have a product that is capable providing the system owner a specific “look and Feel” coupled with dispensing their own specific products via the customizable GUI interface.





·
Custom Application Software has become one of our principal products and source of revenue generation as well as becoming tangible assets of AVT, Inc.  Many of our customers will request a specific sequence of touch screen based pages that allow a user to intuitively navigate through a complete transaction.  These screens are defined as the customers “story board” and are in many cases the foundation of a customized sales of our product dispensing systems as it provides our customer with the means of having a low cost method to brand, expand and market their product.  All of our customized software projects use a blend of other AVT’s developed software IP (intellectual Property) products to complete the project.  In example, our software team will create a custom .dll (Direct Library Link) that will interface with or use parts of AVT’s TSV or AVTi Media modules (or other) thereby creating a custom software product that is then licensed to the customer buying our dispensing systems.  Each system AVT shops will include a paid licensee for use of the TSV, AVTI Media or other as needed.





Our goal is to be the leader in technology based vending and product dispensing solutions that are reflective of today’s “got to have it now” consumers. Serving international vending owners and operators whose desire is to have a better experience with vending equipment. We strive to grow our business by developing superior customer solutions, adapting new technologies, and pursuing appropriate mergers and acquisitions.  Our growth is dependant upon the development of new technology, the incorporation of advertisement on the vending machines, and the sales of our RAM 4000 and RAMS 5000 systems, the introduction of the next generation Product Dispensing Centers, and the development of revolutionary vending technologies.





Vending History





Vending machines had been introduced to Americans over 70 years earlier by Thomas Adams, who installed them on New York City's elevated train platforms to sell his Chicklets gum. After World War II the vending industry grew twice as fast as the gross national product, driven by three primary factors: rising labor costs made machines an attractive alternative to human laborers; technological advances in food preservation and dispensing equipment permitted service of hot meals, sandwiches, coffee, and soft drinks; and technological advances were made in money-changing equipment. Vendors targeted "captive" markets in factories, offices, schools, and other institutions--a huge market with plenty of potential for growth and competition. The vending industry had achieved $2.5 billion in annual sales by 1960, and with statistics showing that Americans ate one in four meals away from home, vendors and stockbrokers foresaw a fine future for vending.





The Market





The vending industry is a $42 billion domestic market as reported by The Vending Times Census of the Industry 2004.  This figure represents the revenues generated by vending owners/operators and excludes office coffee and manual food service.  Manual food service represents an additional $10 billion in annual demand for convenience food.  Vended Food Products, which include refrigerated, frozen, can/bowl pack, and other meal items represents a $3.1 billion segment. While data on vended frozen foods is not stated specifically, industry sources including Vending Times and The Automatic Merchandiser Magazine concur that frozen food is a growth category while fresh foods are declining. Frozen food machines include ice cream machines as well as frozen entree machines that require an adjacent microwave oven to heat the item.





According to the Vending Times, there are an estimated 1.4 million vending locations throughout the United  States situated in manufacturing plants, factories, offices, government buildings, schools, colleges, hospitals and other public locations. These are served by approximately 9,000 vending operators.  In addition, there are approximately 52,000 hotels in the United States and 300,000 worldwide according to the American Hotel & Lodging Association (www.ahma.com). There are approximately 6,000 business-oriented hotels with more than 150 rooms, and approximately 14,000 hotels with 75 to 150 rooms. The growth rate for the overall vending market is 5% annually.




Our Products and Services





We have a family of products which are geared towards improving the experience of consumers, establishments, and operators in the convenience food, digital signage and product dispensing industry.





Our current line of products and services are described below.





Automated Express Market





We have developed and created our Automated Express Market (AEMTM) system which is Controlled Access Cabinet system. These custom built wood and steel based cabinets are PC based and designated for use in specialized locations such as hotels, Inns, c-stores, malls and retail stores that are limited in the ability to effectively sell and market food, convenience items or higher priced items which are subject to pilfering. The cabinets can be merchandised to dispense more than seventy-two selections including snacks, hot meals, ice cream, alcoholic and non-alcoholic beverages as well as personal amenities such as sunscreen, toothpaste, and brushes.  They can also be configured for high ticket items such as cell phones, digital cameras mp3 players personal electronic devise and more. The AEMTM system gives the hotel’s customers the convenience of billing directly to their room through touch screen pin technology so they do not have to carry cash or coin to make purchases. The system automatically posts the charge to the guest’s account by utilizing touch screen vending (TSVTM) and multi-payment capabilities. AEMTM cabinets have multiple payment options built in that include touch screen payment technology, credit/debit acceptors and smart card readers.   We are currently exploring opportunities with many limited service hotel chains in the U.S., a market that totals more than 50,000 establishments as well as c-stores and retail stores and shopping malls.





Media Advertising





We have developed a software product called AVTi MediaTM which allows for an advertising medium (player) to be added to virtually any of AVT designed systems including AEMTM cabinets and all four next generation vending and product dispensing systems.  By incorporating AVTI Media, we allow the consumer to view the media, advertising or hotel messaging while they make their selections.  AVTi Media can generate advertising revenue for owners and operators in many settings such as conference rooms, hotel lobbies, airport terminals, restaurants, car rental outlets and surgery center waiting rooms.  By having vending machines in prominent locations within major companies, the vending operator “owns” the valuable space that can be used to generate advertising revenue through the Digital TV Message Board or (DTVMB) technology.  Our Vending Management System software allows for the management of machine inventory, repairs, collections and advertising through remote access. VMSTM enables owner/operators to reduce costs and increase profits by enabling real time access to inventory levels, system status, machine service and daily receivables with little to no machine down time.





Vending Management SystemTM (VMS)





Our VMS systems is another AVT developed software product that allows us to remotely view  information for each machine to help plan for daily replenishment, sales statistics and alerts of systems malfunctions to operators as well as defect history for each machine by means of software error log files. This technology increases operational efficiency of vending operations and helps to prevent inventory shrinkage and skimming, both major control issues in the vending industry. A key differentiator relative to the offerings of other established players in the vending machine management space is that our VMS solution works via a DSL line cellular modem or Internet Wi-Fi and be substantially less expensive to own and operate than competing systems that do not use the internet for bi-directional transmission of vending system data.





Vend Sensing System (VSS)





We have developed and have a patent pending on our VSS product to provide a surefire solution for detecting all vended items.  The VSS was developed specifically to detect that a vending type of product has dropped from one of the dispensing columns directly above the sensing system and has fallen into the customer delivery bin at the base of the vending system.





The VSS is coupled directly with the vending system control electronics in such that the VSS circuitry is disabled until the vending system control electronics has received payment.  Once payment has been received and the vending system starts the dispensing process, the control electronics enables the VSS circuitry to detect product which has been dispensed and has dropped into the delivery bin below.  During this sensing period, the VSS circuitry is only enabled for the empirical time period it takes to detect any one of the vendible products to fall into the delivery bin.





During the sensing period of time, the VSS circuitry uses an auto-calibrated ultrasonic beam to detect if an object of just about any size, form or shape (designed for detection of any object that can be vended) has fallen into the detectable space of the customer product delivery bin.  If an object (vended product) enters the detectable vending space, the VSS circuitry detects the object and in turn sends a “detected” signal to the Control Electronics.  If the VSS circuitry does not detect an object has entered the customer delivery bin space within the allotted empirical time frame, the VSS circuitry returns a command signal to the control electronics that a “no vend object detected”.  It is the control electronics responsibility to determine the next appropriate action to take.





This invention for product detection provides many distinct and exciting advantages over conventional detection.  First and foremost, the VSS is calibrated to “look” across the entire cross-sectional area of the delivery bin.  This is a primary advantage over the conventional light beam detection method.  The detection system is compatible in cost to that of traditional vending detection systems.  The “self calibration mode allows the system to be able to retrofit into other vending systems with minimal modification needed.





Vending Machine Manufacturing, Sales and Placements





We currently manufacture next generation refrigerated and high capacity snack machines as well as standard and customized product dispensing systems. These machines have been designed to meet or exceed our specific performance specifications and give us the ability to minimize costs traditionally associated with purchasing new equipment.  The manufacturing of our own equipment also allows us to incorporate our technology into the systems during at the time of production reducing the costs associated with retrofitting units. We sell these systems directly to distributors, vending operators and end users located primarily throughout the United States, Canada and Mexico. We believe that we are currently the only manufacturing entity with this capability in the vending industry, giving us a tremendous lead and advantage over our competition.





The major competitive advantages of AVT’s next generation machines is they all have the capability of being configured with an integrated PC.  The integrated PC allows for a variety of additional functions which include but are not limited to, cashless vending, remote sales management and media advertising for creating additional revenue through the sale and display of advertising play loops.  The feature of playing multiple looping advertisements yields the possibility of adding additional stream of revenue which may exceed that of the sales of vended product.  Another significant advantage is the ability to plug into a standard 120 VAC household power outlet. As an operator, AVT’s experience is that the unit price of a machine and sometimes the required 220VAC circuits for the units represent major constraints to growth of a vending company.  Our next generation machines will cut machine acquisition cost by greater than 50% and eliminate expensive power outlet upgrades for establishments and operators increasing placement and sales opportunities.  Through the design and manufacturing of vending and product dispensing systems using new technologies, we have become a vendor of equipment for the entire gamete of food and high priced consumer electronics and dispensed items. With capabilities to produce machines that are far less expensive, less power demanding and having multi-pay options other than the traditional market standard, we have the opportunity to grow the mainstream as well as specialty segment of vending machine manufacturing and operations to become a major equipment provider to other distributors, all without a heavy capital investment.





BUSINESS STRATEGY





Manufacturing Capabilities





AVT is a full service developer and manufacture of highly integrated vending and product dispensing systems.  Over the past several years, AVT has assembled an integral team of experienced engineers and qualified technicians and software programmers to develop technology based solutions comprised of original and inventive technology and integrating this technology into a line of sophisticated self service products.  At the heart of our business is our engineering, manufacturing and creation of inventive and functional application software for use on AVT designed and manufactured systems.





Design:  AVT employs a complete design team.  Our engineers use creative tools such as “Solid Works” to develop and generate CAD drawings used by our local manufacturing partners as well as our OEM manufacture in China to produce our state of the art vending systems components which are shipped to our 30 thousand square foot facility in Corona, California for integration, assembly, final testing and deployment.


A multitude of electrical and software tools are also used to create AVT’s proprietary control boards, sensors, and firmware used by all AVT branded product.





Software Development:  We also employ a complete software design and development team.  Our software products are a key factor to the success, functional operation and financial position of the company.  As AVT owned IP, once developed, our software products are sold as a licensed part of every system AVT sells that has been integrated with an optional PC.  We design our software products using today’s state of the art high level programming environments which produce effective and efficient software programs that are highly flexibly and user friendly while maintaining the elevated degree of complexity and inventiveness that yield a superior and competitive product.





PRODUCTS





The RAM4000 Vending Machine





Our RAM4000 is a refrigerated vending system..  This is a refrigerated snack/beverage combo machine that uses all of our current technology to vend 4 rows of food, beverage, snack and candy or any combination thereof .  The RAM4000 is ideal for smaller populated vending accounts, OCS locations and the school segment.  The RAM400 uses our optional Multi-Pay system allows the machine to accept Cash, ATM, and Credit Cards.  The system also accepts AVT’s optional AVTi Media product and VSS product drop detection system.





The RAM5000 Vending Machine





Our RAM5000 machine is our answer to the industry’s need for a higher capacity non refrigerated snack machine which utilizes all of our current technology.  The RAM5000 vends 5 rows of non-refrigerated snack and candy or any combination thereof. RAM5000 is ideal for smaller populated vending accounts needing a high capacity vending machine, OCS locations and the school segment. Like the RAM4000, the RAM5000 uses our optional Multi-Pay system allows the machine to accept Cash, ATM, and Credit Cards.  The system also accepts AVT’s optional AVTi Media product and VSS product drop detection system.





Kiosk Systems





In addition to our vending machines, we have incorporated a line of computer and technology based kiosk systems.  These kiosks will be deployed in conjunction with our line of RAM vending systems as well as being sold as self service or control center kiosks systems.  All kiosks have the ability to be fitted with digital signage which runs our media software products to be come a part of AVTi Media Network.





AVTi Media





AVTi Media is an advertising medium option available basically all AVT products including our next generation vending RAM 4000/5000 vending systems.  AVTi Media displays media, advertising, or hotel messaging on video screens located on the vending machine or product dispensing systems..  Consumers may view the media while they make their selections at the vending machine.  AVTi Media can generate advertising revenue for owners and operators in many settings. Our target market are surgery centers, health clubs, dentist offices, retail sites, and any organization that has a high-traffic, captive audience that is striving to enhance the experience of their customers.





Fabrication





We fabricate the housing for our vending machines utilizing offshore contract manufacturers.  Our final fabrication and assembly is based in Corona, California at our main facility.  Local manufacturing includes approximately 10,000 sq/ft of sheet metal fabrication and 15,000 sq/ft of assembly.  In-house Fabrication Capabilities include; Sheet Metal Forming, Welding, NC Punching, pot Welding, Machining and Fabrication (Fabrication Programming Software).  In-House Assembly Capabilities include; Line Assembly, System Integration, QC Testing, Silk Screening, Operational Testing.





COMPETITION





Manufacturing Competition





We primarily manufacture two vending systems; a refrigerated low capacity machine, the RAM 4000, and a non-refrigerated high capacity vending machine, the RAM 5000.  Both of these base models systems can house a variety of AVT designed and integrated technology making either the RAM 4000 or RAM 5000 or any one of the several derivative systems unique with the vending industry.  Several of our pending patents may present a potential monopoly within the vending industry thereby forcing other manufacturing competitors to pay us for royalties or licenses fees for use of our patented technologies.





Many of our manufacturing competitors have been in business for many years building base line types of traditional vending systems. We believe that these companies are competitors for our RAM 4000 and RAM 5000 base line systems.  Several of these competitors are described below.





•  Crane:
Which also owns Dixie Narco, AP (Auto Products) and National Vendors is the largest manufacture of traditional baseline vending systems.•  USI:
A seasoned vending manufacture having many years in the manufacturing of traditional baseline vending systems.•  AMS:
A large manufacture which designs its own traditional baseline systems and has been in the vending business for many years.•  Zoom Systems:
A manufacture which does design vending systems which integrate high levels of technology.    Because Zoom Systems integrates high levels of technology into its systems, it would be considered one of AVT’s primary competitors.





Although we have competition with vending routes and vending machine sales, we believe that as a technology based company, we are unique to the vending and kiosk industries in that we have the ability to design, develop then integrate our technology into our premium line of vending systems.  Due to this specialized approach, we believe that other than Zoom Systems,  we currently do not have any significant competition which is capable of integrating current technologies in the form of PC based operation, RF wireless control or similar technologies seamlessly into vending systems or products.





Vending Operations Competition





There are several vending companies in Southern California and the United States.  These competitors offer machine sales and vending route operations much the same as we do.





Our route and vending operations serve as our core business structure.  Our route and vending operations utilize approximately 10 service trucks to service approximately 650 placed systems in 250 locations.  Our service operation is based in Corona California and covers the primarily the areas of Riverside, Orange and Los Angeles counties.   We currently compete in these counties with several other competitors.  Although these are our competitors from the sense that they have offer similar route and vending services, they do not manufacture machines as we do.   These competitors are as follows.








•  Take a Break:
Primary operations in Corona having about 20 trucks to service their routes.•  Continental:
Primarily operations in Orange County having have about 30 to 35 trucks servicing their routes.•  Complete:
Primarily operations in Riverside and San Bernardino Counties havingapproximately about 19 trucks.





PATENTS





We currently have five pending patents for our technology.  These pending patents are summarized below.





Multimedia System, Method for Controlling Vending Machines


Serial Number 11-588,422


(Filed:  October 27, 2006)





Conventional control of vending systems is typically done by using a system control board consisting of a PWB (printed circuit board) and a microcontroller supported by a group of discrete electronic components.  These system components are used to control the various system functions of a vending machine i.e. spinning of auger motors, control of bill and coin acceptors, LED display feed back etc.





Our invention of Touch Screen Vending or TSV has redefined the conventional method of vending machine control.  TSV empowers the use of a multimedia PC and a color touch LCD display to virtually control the complete operation of the vending machine.  The PC stores a data base software program of all desired products to vend with an associated color digital image of each item.  A second application program displays the color image of the intended items to vend in the exact format as seen through the glass front of the vending machine.  The PC also controls the collection of currency (i.e. bill acceptor, coin acceptor, credit card reader) in place of the vending machines control board.  I/O (input/output) ports from the PC are used to interface to the vending machine control board and all aspects of operation of the vending machine is under complete control by a multimedia PC coupled with the touch screen LCD.





This invention for the control of vending machines provides many distinct and exciting advantages over conventional control such as the universal language of using a touch display to select desired products to vend in place of an alphanumeric keypad.  The system can generate virtually any type of report to combat money or product shrinkage while providing exact control of inventory.  The LCD provides a means of generating additional revenue through advertising displayed products or other services while the system in idle mode.





Vend Operating System


Claims to be amended to the Multimedia System, Method forControlling Vending Machines – Serial Number 11-588,420


(Filed:  October 27, 2006)





Our Vend Operating System (Vend OS) is a next generation vending and product dispensing system utilizing a personal computer (PC) to drive the system components and utility software.  The uniqueness in the system lies in that the vending system uses a PC to control the vending system as compared to the prior art in the vending industry which typically uses discrete component controllers for overall system operation and control.





Our Vend OS is broken up into two sections hardware and software. The hardware consists of the following devices: Virtual Sensing System (VSS), a USB Omni-pattern scanner, a USB Magtek Card Reader, a USB Pyramid Bill Acceptor, a MDB Coinco coin machine, a 7 inch LCD screen built-in with the Nano-ITX PC, and a portable mpeg player (allowing static media files to play in a continuous loop).   The software consists of the following applications: Vending Management System (VMS), Touch Screen Vending (TSV) and AVTI Digital Signage Media.





Our Vend OS is extremely flexible in its capabilities because the product is installed in our RAM bases systems without any peripheral devices and a Nano-ITX computer that includes a freeware developed by our engineering department running as a Windows’ service allowing vending by conventional ways. This freeware allows sales data and records to be stored in a secure database and has the capability of manipulating a machine’s state remotely through internet connectivity, memory stick, cell modem or phone line.





With our Vend OS we can:  manipulate product prices; turn the machine off and on, turn the compressor off and an, manipulate the change returned, manipulate the system clock, and read the machine’s state from the MDB interface and motor/auger control.  Our Nano-ITX computer includes an optional 7” touch wide screen LCD, a flash ROM that runs Microsoft Embedded System, a MDB to RS-232 interface board that connects from a VMC board to the PC serial port, motor driver printed circuit board and a PCMCIA modem that allows wireless internet connection as a typical system but control for any variety of input or out put devices are part of the scalable system.





Wireless Management of Remote Vending


Serial Number 60-730,369


(Filed:  October 27, 2005)





Conventional methods for managing the inventory of vending machine product, price selection and for checking the daily sales numbers are typically performed by a route driver who manual checks the vending machine on a frequent basis by driving to the vending machine/s location and performing a variety of manual operations which include interrogation of the vending machine’s control board.





The invention of “Wireless Management of Remote Vending” defined as VMS (Vending Management System) is a method for performing the management on many of the above listed vending machine functions.  Information on vending activity is stored in the vending machine’s electronic control board which is then wirelessly transmitted out through the VMS module to a wireless cell phone network.  The information received on wireless network is downloaded then transmitted over the internet to one central PC server/s located at AVT.  The information stored on AVT’s server/s can be accessed via a secure log-in function (user’s account) to review and manage any specific vending machine in the network (which has been equipped with a VMS module).  The flow of VMS information and data is a bi-directional operation.  Users can also upload data, changes and control function out from their secure account to any of the vending machines in their specific network.





VMS was designed to be a low cost solution with high tech performance.  Vending route operators with as little as one or and many as one hundred (or more) vending systems in the field and equipped with VMS can now remotely and effectively control and managed their vending operations from a single PC located at the home office.  Remote VMS management controls money and product shrinkage, manages inventory by letting the vending operator know exactly what has sold and what needs to be replaced and monitors and transmits systems critical information such as machine temperature, system errors and failure modes and alerting the vending operator instantly for expeditious disposition on any vending system in the field equipped with a VMS telemetry module.





Vend Sensing System


Serial Number 11-976,311


(Filed:  October 23, 2007)





Historically, the vending industry has typically used the conventional method of breaking or impeding a light beam for detecting when a product which has vended (dropped from a column above delivery bin).  In most cases, the light beam consists of an infrared transmitter and infrared detector which are mounted in a direct “line of site” of each other.  When a product has dropped across the light beam, the product will momentarily break the path of the light beam which sends an interruption signal to the vending system’s control board for processing.  Because a focused light beam is inherently narrow, this often causes the light beam to miss narrow items such as a thin candy bar.  Our Vend Sensing System (VSS) has redefined this conventional method for detecting a vended product utilizing ultrasonic sound.





During the sensing period of time, the VSS circuitry uses an auto-calibrated ultrasonic beam to detect if an object of just about any size, form or shape (designed for detection of any object that can be vended) has fallen into the detectable space of the customer product delivery bin.  If a vended product enters the detectable vending space, the VSS circuitry detects the object and in turn sends a “detected” signal to the control electronics. If the VSS circuitry does not detect an object has entered the customer delivery bin space within the allotted empirical time frame, the VSS circuitry returns a command signal to the control electronics that a “no vend object detected.”  It is the control electronics responsibility to determine the next appropriate action to take.





The VSS is coupled directly with the vending system control electronics so that the VSS circuitry is disabled until the vending system control electronics has received payment.  Once payment has been received and the vending system starts the dispensing process, the control electronics enables the VSS circuitry to detect product which has been dispensed and has dropped into the delivery bin below.  During this sensing period, the VSS circuitry is only enabled for the empirical time period it takes to detect any one of the vendible products to fall into the delivery bin.





This invention for product detection provides many distinct and exciting advantages over conventional detection.  First, the VSS is calibrated to “look” across the entire cross-sectional area of the delivery bin.  This is a primary advantage over the conventional narrow light beam detection method.  The detection system is compatible in cost to that of traditional vending detection systems and because it is self calibrating, it can readily retrofited into other vending systems with minimal modifications.





System and Method for Interactive Advertising


Serial Number 60-935,045


(Filed:  July 24, 2007)





Our System and Method for Interactive Advertising is a unique solution for potential clients or users to interact to a specific network of supplied information such as advertising and branding via a secure or unsecured network.  The system is designed to allow for direct customer interaction through existing telephone switch based infrastructure such as pay phones.





The new system essentially takes our base advertising hardware/software products and adapts them for the telephone industry.  This adds a level of customer interaction based upon touch or other interactive means such as a keyboard or a display message.  Customers using the system may be rewarded either with discounts and/or promotional deals depending upon the touched advertisement after responding to simple instructions displayed on the screen.





In addition, the smart technology integrated into each system telephone may also be fitted with the appropriate hardware to make that specific location a “Hot-Spot.”  Each Hot-Spot provides customers with another means  of interacting with the ATV network through free of fee-based connectivity using the customer’s portable device such as a smart phone or laptop computer, or any other portable electronic device capable of linking to the Hot-Spot by means of cable, wireless, or infrared radio frequency.  Each Hot-Spot location allows customers to use wireless internet within the location’s range to aid them in acquiring their discounts and/or rewards more quickly and specific advertisements may be downloaded and displayed on the phone touch screen.  Ideally, customers may form a dependency for the Hot-Spot’s use and become a habitual user of the AVT technology and services.





Effect of existing or probable governmental regulations on the business





The effects of existing or probable government regulations are minimal.





FABRICATION AND DESIGN





AVT is dedicated to the development of technology enriched vending and product dispensing systems.  Our fabrication and design team is staffed with software, electromechanical and firmware engineers, and information technology specialists with the primary responsibility of developing and integrating new technology into our vending systems.





Our fabrication and design team uses creative tools such as “Solid Works” to develop and generate CAD drawings which are used by our local manufacturing partners and OEM manufacture in China to produce our state of the art vending systems, components and retrofit designs.  These machines are shipped to our facility in Corona, California for integration, assembly, final testing and deployment.





Fabrication and design effort is the design and enhancement of our AVTi Media products.  The AVTi Media products are integrated into our base systems and also sold to other vending manufactures.  The following is a summary of our current AVTi products:





•  AVTi Media Administer:  This is a program designed to manage and administer all aspects and features of our digital signage program.  The Media Administrator allows a remote operator to create, manage, update and scheduled ads that will play on LCD displays which have been integrated into vending systems.





•  AVTi Media Client: This is a program designed be located on the vending system’s integrated PC and has the priority of playing the ad “play list.”  This client software also uses prescheduled times to monitor the server to “update” the playlist as required.





•  AVTI Media Server:  This is a server based program which coordinates the efforts, changes and directives from the administrator program with the schedule efforts of all the multiple clients located in the field and connected via the internet.





Our secondary fabrication and design efforts run concurrently with our primary efforts to support ongoing systems and to develop new products.  These products are summarized as follows:





•  TSV:  Touch Screen Vending is an ongoing software development effort which is our primary flagship software product.  This is a modular program designed to evolve with the changing technologies supporting our vending and dispensing products.





•IVend:This is an ongoing development design that features a high-end dispensing center which combines our base RAM 4000 cabinet with a creative front door design which includes interactive touch screens and a variety of other supported hardware.  The IVend also has its own software application program which is designed to provide a high degree of interactive and intuitive application to the user.





•Tech Store: This system is similar to our IVend system designed for middle priced systems.





•Vend Mart: This system is similar to our IVend system designed for entry level priced systems.  The Vend Mart also has its own software application program which is design to provide  a high degree of interactive and intuitive application to a base line vending systems equipped with TSV.





In additional, we have a variety of ongoing hardware and software R&D projects which are at various stages of development.  The following is a brief list of some of our non-confidential R&D efforts:





MDB – PC Software Interface

DEX to PC software Interface

MDB to USB Hardware Device

DEX to Radio Controller PCB

X – Y Dispensing Center Design
VMSII – Hardware/Server/Software Project

VMS – Drop Sensing efforts

AEM Cabinet Design

Multiple All-In-One PC/LCD Displays designs

Multiple Custom Dispensing Projects


Costs and effects of compliance with environmental laws





The expense of complying with environmental regulations is of minimal consequence.





Number of total employees and number of full time employees.





We currently have approximately 23 full time employees and 5 part-time employees.  We allow and utilize the services of independent contractors.




Results of Operations





For the three months ended June 30, 2010 our revenues increased by $519,349 from $869,448 for the three months ended June 30, 2009, to $1,388,797 for the three months ended June 30, 2010.  This increase in revenues is due to increased manufacturing sales.





Total operating expenses increased significantly for the three months ended June 30, 2010, compared to the three month ended June 30, 2009,  this increase of  $488,619 was due to an increase of $112,640 relating to vending manufacturing; $46,065 relating to non-vending operations; and $322,876 in general and administrative expenses.





For the three months ended June 30, 2010, our net income has decreased from $29,183 from the three months ended June 30, 2009.   This decrease in net income is primarily due to increased general and administrative expenses and manufacturing expenses.





For the six months ended June 30, 2010, our net income has decreased by $29,183, compared to the same period for the previous year.





Total revenues for the six months ended June 30, 2010, were $1,388,797 compared to total revenues of $869,448 for the six months ended June 30, 2009.  The increase in revenues is due to increased manufacturing  revenues of $519,349.We attribute the increased manufacturing revenues to increased sales of custom vending machines.





For the six months ended June 30, 2010, we had revenues of $1,388,797, and total cost of goods and operating expenses of $1,302,579 for net income of $24,670.  This compares to the six months ended June 30, 2009 where we had $869,448 in total revenues, $813,960 in total costs of goods and operating expenses for a net income of $53,853.  We attribute the decrease in net income for the six months ended June 30, 2010, due to increased general and admin expenses and manufacturing cog expenses.





Our increased cost of goods sold for the six months ended June 30, 2010, was attributable to increased sales of our vending machines.   Operating costs increased due to related general and administrative expenses.





We believe that the increased spending on manufacturing is necessary for the company to move away from vending operations and work towards increased machine sales and the development of technology which allows for the sales of our electronic payment, back end inventory control and advertising products





We expect to increase sales over the next 12 months due primarily to sales of our RAM5000 vending machine.  Increased sales of the RAM5000 along with increased sales of custom vending technology should increase our overall revenues for the next 12 months.





We believe that we have sufficient available cash and cash flow from operations to satisfy our working capital and capital expenditure requirements during the next 12 months.  There can be no assurance, however, that cash and cash flow from operations will be sufficient to satisfy our working capital and capital requirements for the next 12 months or beyond.





Inflation and changing prices have affected our business as related primarily to fuel and increased vehicle expenses.  We anticipate that fuel costs will continue, thus increasing our operating costs.  Our cost of goods and prices for our products remain relatively stable and we expect this trend to continue through the end of 2010.





Liquidity and Capital Resources





We have historically financed operations through a combination of cash on hand, cash provided from operations and the sale of our securities.  As of June 30, 2010, we have $288,795 cash on hand.





At June 30, 2010, we had cash of $288,795 compared to cash of $1,078,252 at December 31, 2009.  We consider this decrease in cash as insignificant for the current quarter.





For the six months ended June 30, 2010, our inventory increased compared to our ending inventory for the year ended December 31, 2009. At June 30, 2010, we had inventory of $960,684 compared to $395,461 at December 31, 2009.  This increase relates primarily to receiving new shipments of vending machines from our manufacturer in China.





The Company’s assets increased to $19,652,272 at June 30, 2010 compared to $18,599,987 at December 31, 2009.  This $1,052,285 increase in assets is primarily due to increased account receivables and inventory.





Future Goals





Over the next 12 months, we will have an increased focus on completing and releasing our line of advanced Automated Retailing Dispensing Systems.  To complement this new line dispensing systems, we will continue the enhancement of our application software that supports not only these systems but all of AVT’s vending and dispensing solutions.  We will continue to enhance our research, development and marketing efforts that have already elevated AVT to one of the top innovative dispensing solutions companies in the country. We will also focus efforts on our manufacturing efforts and agreements to a more “blended” model having offshore, European and USA based manufacturing sub-contractors to produce the housings and sub-systems for our technology based new line of Automated Retailing Dispensing Systems as well as the RAM4000 and RAM5000 vending systems.





Over the coming months, our goal will also be streamlining manufacturing through supply change management, alignment with established distributors and increase our internal direct sales to meet the anticipated industry demand for a competitively priced base dispensing system that is an energy efficient, technology based, and defines a “Green” system for our industry.





A critical focus for sales over the next 12 months will be to concentrate on our Automated Retailing Dispensing Systems and custom Product Dispensing Centers (PDCs).  These AVT designed and branded system integrates more sophisticated technology features and options such as full face large touch screen displays, receipt printers, cashless payment options and advertising displays.  In addition, our these systems can dispense a variety of snack items and non-food items such as cell phones, MP3 players, digital cameras, apparel, DVDs, consumer electronics and accessories.  We will also focus on custom and “Themed” systems to dispense products such as tee-shirts, promotional items, perfumes, contact lenses and just about any product our customers have a location and market for.  Our custom and themed systems are of exceptional interest and value to our direct end customers and retailers as the products these systems dispense result in higher profit margins.





All of our vending and dispensing systems are capable of the inclusion of PC hardware, LCD displays and a variety of customer preferred peripherals.  A future goal of AVT is to complete and continue to refine application software that runs digital signage for the primary purpose of displaying paid advertisements.  As we sell systems that are equipped with a PC and LCD display, each system becomes a “node” on a digital network.  As the network expands, many thousands of vending systems and PDCs can be part of nationwide advertising network which we believe will be of interest for national advertisers.  Our goal is to “own” the network but not the systems.  All vending system owners will have the option to join the AVT nationwide network with our AVT based advertising vending system to get an equitable share of revenue for allowing advertisements from AVT’s server to be pushed-out onto their vending system.





Future goals will also include system enhancements including continued software and hardware development and refinements that will embrace even more efficient operating systems that integrate more seamlessly with the internet via AVT owned “Web” servers that are we are striving to be the de-facto standard in the state-of-the-art of today’s “connected” solutions which will include the operations of Blue Tooth, SMS and email features among others. Our goal is that the AVT dispensing systems and solutions will become the standard for intelligent self-service systems deployed throughout the US and world markets.





In addition, within the next 12 months, we will continue to work to become a full reporting company and have our common stock trading on the OTC Bulletin Board.





Off-balance Sheet Arrangements





We maintain no significant off-balance sheet arrangements





Foreign Currency Transactions





None.





ITEM 3.                      QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK





We currently do not utilize sensitive instruments subject market risk in our operations.  In the event that we borrow money for our operations, our principal exposure to financial market risks is the impact that interest rate changes could have on our loans.





ITEM 4.                      CONTROLS AND PROCEDURES





In accordance with Rule 13a-15(b) of the Securities Exchange Act of 1934, as of the end of the period covered by this Report on Form 10-Q, our management evaluated, with the participation of our principal executive and financial officer, the effectiveness of the design and operation of the Company's disclosure controls and procedures (as defined in Rule 13a-15(e) or Rule 15d-15(e) under the Exchange Act). Disclosure controls and procedures are defined as those controls and other procedures of an issuer that are designed to ensure that the information required to be disclosed by the issuer in the reports it files or submits under the Act is recorded, processed, summarized and reported, within the time periods specified in the Commission's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Act is accumulated and communicated to the issuer's management, including its principal executive officer and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.





Based on their evaluation of these disclosure controls and procedures, our chairman of the board and chief executive and financial officer has concluded that our disclosure controls and procedures are effective.





Item 4T. Controls and Procedures.





Our management is responsible for establishing and maintaining adequate internal control over financial reporting. The Company's internal control over financial reporting has been designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles generally accepted in the United States of America. The Company's internal control over financial reporting includes policies and procedures that pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect transactions and dispositions of assets of the Company; provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America, and that receipts and expenditures are being made only in accordance with authorization of management and directors of the Company; and provide reasonable assurance regarding prevention or timely detection of  unauthorized acquisition, use or disposition of the Company's assets that could have a material effect on the Company's financial statements.





Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.





Management assessed the effectiveness of the Company's internal control over financial reporting at June 30, 2010.  In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO") in Internal Control--Integrated Framework. Based on that assessment under those criteria, management has determined that, at June 30, 2010, the Company's internal control over financial reporting was effective.





This Report on Form 10-Q does not include an attestation report of the Company's registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by the Company's registered public accounting firm pursuant to temporary rules of the SEC that permit the Company to provide only management's report in this annual report.





Inherent Limitations of Internal Controls





Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Our internal control over financial reporting includes those policies and procedures that:





●

pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets;●

provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and●

provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on the financial statements.





Our management does not expect that our internal controls will prevent or detect all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of internal controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. Also, any evaluation of the effectiveness of controls in future periods are subject to the risk that those internal controls may become inadequate because of changes in business conditions, or that the degree of compliance with the policies or procedures may deteriorate.





Management has not identified any change in our internal control over financial reporting in connection with the its evaluation of our most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.











PART II – OTHER INFORMATION





ITEM 1.LEGAL PROCEEDINGS





We are not a party to any pending legal proceedings responsive to this Item Number.





ITEM 2.UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS





We have sold the following unregistered securities to accredited investors for the quarter ended June 30, 2010.





04/01/2010 – 06/30/2010Date of Sale
Purchaser’s Name
Price
Security
# of Shares Sold04/01/10
Thomas A. Caruso
$120,480.00
Common Stock
172,11404/16/10
Kathleen M. Mueller
$12,000.00
Common Stock
16,00004/26/10
Dana J. Bruns
$20,000.00
Common Stock
26,66705/04/10
Thomas A. Caruso
$490.00
Common Stock
74305/10/10
Gabriel Pizano
$30,000.00
Common Stock
40,00005/12/10
Christa McCann
$6,000.00
Common Stock
8,00005/18/10
Christa McCann
$5,970.00
Common Stock
8,00005/19/10
Robert Burki
$6,000.00
Common Stock
8,00005/21/10
Robert Burki
$6,000.00
Common Stock
8,00006/09/10
Paula Greco
$9,695.00
Common Stock
1292604/01/10
Thomas A. Caruso
$120,480.00
Common Stock
172,11404/16/10
Kathleen M. Mueller
$12,000.00
Common Stock
16,00004/01/10
Sylvia Ochs
$25,000.00
Note04/09/10
Griselda M. Ballester
$50,000.00
Note06/11/10
Stephen Paul Yarosko
$5,000.00
Note06/11/10
Anthony C. Dematteo
$5,000.00
Note06/25/10
John Dawson
$20,000.00
Note04/01/10
Sylvia Ochs
$25,000.00
Note





There were no underwritten offerings employed in connection with any of the transactions set forth above.





The issuance of securities described above were deemed to be exempt from registration under the Securities Act in reliance on Section 4(2) of the Securities Act of 1933 and Regulation D as transactions by an issuer not involving any public offering.  The recipients of securities in each such transaction represented their intention to acquire the securities for investment only and not with a view to or for sale in connection with any distribution thereof, and appropriate legends were affixed to the share certificates and other instruments issued in such transactions. The sales of these securities were made without general solicitation or advertising.





We intend to use the proceeds from sale of our securities to purchase equipment for vending operations, vending machines, supplies and payroll for operations, professional fees, and working capital.





ITEM 3.DEFAULT UPON SENIOR SECURITIES





None.





ITEM 4.(REMOVED AND RESERVED)








ITEM 5.OTHER INFORMATION





None.





ITEM 6. EXHIBITS





Exhibit
Form
Filing
Filed withExhibits
#
Type
Date
This ReportCertificate of Incorporation filed with the Secretary of State of Delaware on February 25, 1969.
3.1
10
8/14/2008Certificate of Amendment filed with the Secretary of State of Delaware on December 16, 1985.
3.2
10
8/14/2008Certificate of Amendment filed with the Secretary of State of Delaware on March 5, 1987.
3.3
10
8/14/2008Certificate of Amendment filed with the Secretary of State of Delaware on February 11, 1991.
3.4
10
8/14/2008Certificate of Renewal filed with the Secretary of State of Delaware on January 14, 2005.
3.5
10
8/14/2008Certificate of Amendment filed with the Secretary of State of Delaware on September 22, 2005.
3.6
10
8/14/2008Amended and Restated Certificate of Amendment of Incorporation filed with the Secretary of State of Delaware on April 28, 2006.
3.7
10
8/14/2008Articles of Incorporation filed with the Nevada Secretary of State on September 24, 2007.
3.8
10
8/14/2008Certificate of Amendment filed with the Nevada Secretary of State  on November 30, 2007.
3.9
10
8/14/2008Certificate of Merger filed with the Secretary of State of Delaware on December 11, 2007.
3.10
10
8/14/2008Certificate of Designation of Rights, Preferences, Privileges and Restrictions of Series A Convertible Preferred Stock filed with the Nevada Secretary of State on March 5, 2008.
3.11
10
8/14/2008Amended and Restated Bylaws dated March 12, 2008.
3.12
10
8/14/2008Consulting Agreement effective October 1, 2006 between Automated Vending Technologies, Inc. and Star Capital.
10.1
10
8/14/2008Consulting Agreement effective January 1, 2006, Between Automated Vending Technologies, Inc. and SWI Trading, Inc.
10.2
10
8/14/2008Employment Agreement effective May 1, 2006, by and between Automated Vending Technologies, Inc. and James Winsor.
10.3
10
8/14/2008Employment Agreement effective as of January 1, 2006 by and between Automated Vending Technologies, Inc., and Natalie Bishop.
10.4
10
8/14/2008Lease Agreement effective January 1, 2007 by and between AVT, Inc. and SWI Trading, Inc.
10.5
10
8/14/2008Employment Agreement effective as of January 1, 2008 by and between AVT, Inc. and Natalie Russell.
10.6
10
8/14/2008Employment Agreement effective January 1, 2008, by and between AVT, Inc. and James Winsor.
10.7
10
8/14/2008Consulting Agreement effective January 1, 2008, by and between AVT, Inc. and Star Capital IR Corp.
10.8
10
8/14/2008Consulting Agreement effective January 1, 2008, by and between AVT, Inc. and SWI Trading, Inc. (Attached as an exhibit to our Registration Statement on Form 10-SB filed with the Commission on August 14, 2008)
10.9
10
8/14/2008Consulting Agreement effective March 1, 2008, by and between AVT, Inc. and SNI Innovations, Inc.
10.10
10
8/14/2008Consulting Agreement effective September 1, 2008, by and between AVT, Inc. and Star Capital IR Corp.
10.11
10/A-1
2/24/2009Agreement and Plan of Merger dated December 3, 2007 by and between Automated Vending Technologies, Inc. and AVT, Inc.
10.12
10/A-1
2/24/2009Consulting Agreement effective January 1, 2008, by and between AVT, Inc. and SWI Trading, Inc.
10.13
10/A-2
7/29/09Employment Agreement effective as of January 1, 2009 by and between AVT, Inc. and Natalie Russell.
10.14
10/A-1
2/24/2009Employment Agreement effective January 1, 2009, by and between AVT, Inc. and James Winsor.
10.15
10/A-1
2/24/2009SWI Trading, Inc, note effective November 1, 2006
10.16
10/A-2
7/2/09SWI Trading Loan Cutback Agreement dated  January 31, 2008
10.17
10/A-3
11/19/2009Consulting Agreement effective September 1, 2009, by and between AVT, Inc. and Star Capital IR Corp.
10-18
10/A-3
11/19/2009Code of Ethics
14.1
10
8/14/2008Certification of Natalie Russell pursuant to Rule 13a-14(a)
31.1


XCertification of James Winsor pursuant to Rule 13a-14(a)
31.2


XCertification of Natalie Russell pursuant to 18 U.S.C Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.1


XCertification of James Winsor pursuant to 18 U.S.C Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.1


X








SignaturesPursuant to the requirements of the Securities Exchange Act 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.Signatures
Title
Date/s/ Natalie Russell

Natalie Russell
President

Secretary

Chief Financial Officer

Principal Accounting Officer

Director
September 24, 2010